On March 14, 2024, the Department of State and the Department of Commerce’s Bureau of Industry and Security (BIS) published Final Rules adding Nicaragua to the International Trafficking in Arms Regulations (ITAR) § 126.1 country list, and applying stricter BIS export controls to Nicaragua. The State Department and BIS cited the Nicaraguan Government’s continued dismantling of democratic institutions and attacks on civil society in addition to Nicaragua’s deepening military and national security ties with Russia. These Final Rules continue to advance the U.S. Government’s interests in restricting the availability of items subject to U.S. law to Nicaragua’s military and security services. These new rules do not impose new sanctions on Nicaragua but the U.S. Department of the Treasury’s Office of Foreign Assets Control (OFAC) previously designated the Nicaragua National Police (NPP) and three of its commissioners as Specially Designated Nationals as of March 5, 2020. BIS added the NPP to the Entity List on March 28, 2023.

Changes Made for Nicaragua under the ITAR

Nicaragua is added to the list of proscribed countries under ITAR § 126.1. Licenses or other approvals for exports and imports of defense articles or defense services to or from Nicaragua will be subject to a policy of denial.

Licenses may be granted on a case-by-case specific basis for non-lethal military equipment intended solely for humanitarian assistance, such as disaster relief.

Finally, brokers must obtain DDTC approval prior to proposing to or engaging in brokering activities subject to the ITAR involving Nicaragua.

Changes Made for Nicaragua under the EAR

The Final Rule makes the following changes to the EAR for Nicaragua:

• Adds Nicaragua to Country Group D:5 (U.S. Arms Embargoed Countries) in supplement no. 1 to part 740 of the EAR, consistent with the addition of Nicaragua to ITAR § 126.1 as a country subject to an arms embargo. Country Group D:5 Countries are subject to additional restrictions in the EAR, including under the de minims rules, license exception availability, and licensing policy for certain items.

• Moves Nicaragua from Country Group B to Country Group D:1 (countries that raise national security concerns) and as a result:

  • Certain exports and reexports to vessels and aircraft located in Nicaraguan ports or registered in Nicaragua are restricted. Exports, reexports, and transfers of certain microprocessors and associated software and technology for defined military end uses and end users pursuant to § 744.17 are restricted to Nicaragua.

  • Exports, reexports, or transfers to Nicaragua of foreign-made items will be subject to two foreign direct product rules: a national security rule in § 734.9(b)(2) and a ‘600 series’ rule in § 734.9(d)(2).

  • Certain license exceptions are unavailable, including Shipments of limited value (§ 740.3), License Exception Shipments to Country Group B Countries (§ 740.4), and Technology and software under restriction (§ 740.6). In addition, certain provisions in other license exceptions available to Country Group B countries are restricted to Country Group D:1 countries.

• Nicaragua is subject to a more stringent licensing policy for national security controls set forth in § 742.4 and applications will be reviewed to determine the risk of diversion to military end use or end user.

  • BIS will apply a presumption of denial for license applications to export, reexport, or transfer items to Nicaragua that would make a material contribution to the “development,” “production,” maintenance, repair, or operation of weapons systems, subsystems, and assemblies.

  • Applications for civil end users or uses will be subject to a general policy of approval.
• Nicaragua is now subject to the military end use and end user controls in § 744.21, which prohibit the export, reexport, or transfer of items listed in supplement no. 2 to part 744 without a license.
  • A license will be required for export, reexport, or transfer of any item subject to the EAR listed in supplement no. 2 to part 744 to Nicaragua if the exporter has “knowledge” that the item is intended for military end uses or users in Nicaragua. These license applications will be reviewed with a presumption of denial.
  • EAR99 items, such as food, medicine, or medical devices, are not subject to the new restrictions.

BIS will continue to review applications for exports, reexports, or transfers of items to Nicaragua that are controlled for regional stability (“RS 1”) and Crime Control reasons for national security and foreign policy (including human rights) concerns.

OFAC Sanctions

The Final Rules do not implement additional OFAC sanctions. However, Executive Orders 14088, “Taking Additional Steps To Address the National Emergency With Respect to the Situation in Nicaragua,” and 13851, “Blocking Property of Certain Persons Contributing to the Situation in Nicaragua” provide authority to designate certain persons or entities as Specially Designated Nationals and Blocked Persons (“SDNs”). U.S. Persons are generally prohibited from engaging in any transactions that involve property or property interests of a sanctioned person, subject to license exemption. U.S. businesses should be aware that OFAC has designated multiple Nicaraguan entities and individuals contributing to the situation in Nicaragua as SDNs.

Next steps

The State Department and Commerce Department’s Final Rules are effective March 15, 2024.

Companies should continue to review their business activities and compliance procedures regularly to ensure they comply with applicable new restrictions. Hogan Lovells lawyers can assist you with assessing the potential impact of these and other State Department or BIS rules on your business.